Dividend investing is a strategy to build wealth, and compounding is the process of achieving the goal. When you reinvest dividends (and capital gains) to buy more shares, the reward down the road or over time is higher returns, the result of the compounding effect.

Many publicly listed Canadian companies have paid dividends and provided steady income streams for years. Three TSX dividend stocks are lucrative choices for wealth-compounders or those building retirement wealth today.

Industry major

Pembina Pipeline (TSX:PPL) is a major player in North America's oil & gas midstream industry. The $31.7 billion company generate stable cash flows from diverse and integrated assets to sustain competitive dividends. At $53.27 per share (+23.08% year to date), the dividend yield is 5.05% (quarterly payout).

This 70-year-old energy transportation and midstream service provider has the following attributes: low to moderate business strategy, a self-funded model, and strong financial fundamentals. Investing in the core businesses is an ongoing concern to ensure a reliable and secure energy supply.

In the first three quarters of 2024, revenue, earnings, and cash flow from operating activities increased 16.55%, 20.78%, and 31.74% year over year to $5.24 billion, $1.3 billion, and $2.31 billion. According to Pembina, cash flows from operating fee-based contracts are more than sufficient to cover operating obligations, fund capital expenditures and dividends in the short and long terms.

Cash cow

Cogeco (TSX:CGO) is a Dividend Aristocrat owing to 30 consecutive years of dividend increases. As of this writing, the share price is $59.10 (+9.89% year to date), while the dividend offer is 6.09%. A $6,568 investment in this cash cow will produce $100 every quarter.

The $576.25 million company operates through Cogeco Communications in the telecommunications sector and Cogeco Media in the media industry. Cogeco, a broadband operator in Canada and the U.S., is uniquely positioned for resilient and sustainable growth.

According to management, a three-year business transformation program is in place to strengthen agility, competitiveness, and performance. In fiscal 2024 (12 months ending August 31, 2024), profit dipped 0.2% year over year to $349.4 million, while free cash flow (FCF) rose 12.2% to $475.7 million from a year ago. "Fiscal 2024 marked the beginning of a transformational period at Cogeco," said board chairman Louis Audet.

Defensive asset

Crombie (TSX:CRR.UN) is the real estate business (41.5% ownership stake) of Empire Company Limited, a Canadian conglomerate and iconic grocery retailer. Because this real estate investment trust (REIT) pays monthly dividends, you can reinvest 12 times yearly for faster principal compounding. At $13.96 per share (+7.28% year to date), current investors partake in the 6.41% dividend.

The $2.55 billion REIT owns and operates residential, commercial, and retail properties. Its property development pipeline and available opportunities assure growth in the coming years. Empire accounts for 58.9% of total annual minimum rent, with a weighted average lease term of 11 years.

Crombie's grocery-anchored properties provide predictable cash flows and stabilize the portfolio. On a year-to-date basis (nine months ending September 30, 2024), property revenue and net property income rose 4.4% and 5.7% year over year to $114.4 million and $223.5 million.

Compound your wealth

The current landscape is enticing for income-oriented investors and wealth builders. If you want to compound wealth over 2025, consider buying Pembina Pipeline, Cogeco, or Crombie. All three businesses generate stable cash flows from their businesses.